Aidan and Celina are the only sellers of jack russell terrier (JRT) in Antigua. Celina chooses her profit maximizing number of JRTs to sell, q1, based on the number of JRT's that she expects Aidan to sell. Aidan knows how Celina will react and chooses the number of JRTs that she herself will sell, q2, after taking this information into account. The inverse demand function for JRTs is P(q1+ q2) = 2,000 - 2(q1 + q2). It costs $400 to raise a JRT to sell.   (a)Explain in detail what type of competitors are Aidan and Celina. (b) If Celina expects Aidan to sell q2 JRTs, what will her own marginal revenue be if she herself sells q1 JRTs? (c) What is Celina's reaction function, R(q2)?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

Aidan and Celina are the only sellers of jack russell terrier (JRT) in
Antigua. Celina chooses her profit maximizing number of JRTs to sell, q1, based on the number of JRT's that she expects Aidan to sell. Aidan knows how Celina will react and chooses the number of JRTs that she herself will sell, q2, after
taking this information into account. The inverse demand function for JRTs is
P(q1+ q2) = 2,000 - 2(q1 + q2). It costs $400 to raise a JRT to sell.

 

(a)Explain in detail what type of competitors are Aidan and Celina.

(b) If Celina expects Aidan to sell q2 JRTs, what will her own marginal revenue be if she herself sells q1 JRTs?

(c) What is Celina's reaction function, R(q2)?
(d) Now if Aidan sells q2 JRTs, what is the total number of JRT's that will be sold. 

(e) What will be the market price as a function of q2 only?

(f) What is Aidan's marginal revenue as a function of q2 only?

(g) How many JRTs will Aidan sell?

(h) How many JRTs will Celina sell?

(i) 

Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Bundle Pricing
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education